To create the perfect business plan, include these five elements.
- It's important to include five key elements as a way to create the perfect business plan.
- Be creative with your business plan, but also follow standard formatting rules. Investors need to be able to scan data quickly.
- Revise the business plan often to confirm it’s free of errors and includes all of the vital data about your company.
Your first pitch to investors is likely to shake you up. As you pitch your business idea to more investors, you will get better. Over time, however, the quality of your pitch is likely to lose its edge. Your business plan, however, will continue to make strong impressions, provided you create a killer plan. This guide will help you do that.
1. Follow the basic structure.
Consider the context in which your business plan will be read; it doesn't make sense to change a lot in the basic format. Investors are very clear on what they're most interested in, and it is not in your best interests to create a plan that deviates from that format and is hard to navigate. Follow the basic structure and include the following elements:
- A cover letter
- Title page
- Table of contents
- Executive summary
The cover letter is the traditional short explanation of why you are contacting the recipient. The title page should have your business's name, the founders' names, logo and product images (optional). The table of contents acts as a navigation aid for readers and is followed by the content of your business plan.
There are options to create an abbreviated version. According to the Small Business Administration, a lean startup only includes key elements. This type is ideal if you're looking to launch your business quickly. The information included in the lean startup business plan is focused on company value, infrastructure, target audience, products and services and current/projected financials.
2. Treat the executive summary as a pitch to the busiest investor.
Not all investors you approach will give you that elusive face-to-face meeting. In the absence of influential references, your business plan needs to do the talking, at least to get investors interested. At some stage, you will have to rely on email, and that's where your business plan's executive summary comes into play.
Investors are incredibly busy. If they are interested in your idea, they will only spare five minutes to read the executive summary. Therefore, treat it with importance. You may want to write the executive summary last so you include only the most crucial details and create a crisp pitch. Start with an attention-grabbing statement that draws readers into the plan.
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3. Submit a detailed marketing plan.
A marketing plan is essentially the heart and soul of your business plan. It's critical if this is your first business and you have no previous experience or reputation to back you up. Social media plays an important role in your plan, provided you set proper goals and KPIs from the outset. Your marketing plan should cover every aspect of marketing for your business, including the following:
- Detailed information governing how your product line was created, the pricing mix, your promotions strategy and estimated sales
- Your positioning strategy for your products, the branding strategy, and customer segmentation and targeting plans
- The top competitors for your business, alternatives for your key products and how you plan to combat these challenges
- For product-focused businesses, product augmentation and product line expansion plans
4. Be vocal about your assumptions.
Every business plan makes some well-informed assumptions. These are some examples:
- The purchasing behaviors of certain consumer groups
- Trends in government regulations that impact businesses in a particular geography
- Interest rates and the ease of obtaining working capital
- Increases in the cost of human resources
- The total number of working days for the business in a year
Of the assumptions you include in your plan, mention the ones that might not be obvious. This has two benefits. First, it demonstrates to your investors that your numbers are research-based and not mere guesses. Second, if any of the assumptions don't pan out as expected, you have the plan to go back to in order to explain deficits in performance. Remain transparent since you don’t want to be accused of misleading investors.
5. Include lucid financial details.
Too many entrepreneurs assume they can throw in advanced financial analyses and extrapolations and get investors on board. Remember, the deeper you delve into financial analyses before getting your business off the ground, the more skeptical your investors are likely to be. That, however, does not undermine the importance of the financial information you include in your plan.
- Crisply explain your plan to procure working capital.
- Offer both a pessimistic and an optimistic extrapolation of revenues and margins based on data from the last two years.
- Highlight any historical sales spikes linked to cyclical or special expensive marketing events.
- Explain your plan to manage cash flow.
- List your disaster management plan to demonstrate that you can be relied upon to fulfill your responsibilities to investors.
Before you finalize your business plan, incorporate the time-tested and proven effective suggestions offered in this guide. Also, ask for trusted partners and associates to review the business plan before submitting to lenders and investors.